Harley - Davidson Inc. Motorcycle Industry
INTRODUCTION
The purpose of this report is to develop a strategic corporate objective for HarleyDavidson Inc., a publicly traded, employee owned manufacturer of heavyweight motorcycles, recreational and commercial vehicles, military defense items, and small engines, distributing its products to domestic and international markets targeting all men and women of all ages.
INDUSTRY AND COMPETITIVE MARKET
The industry under study is the motorcycle industry consisting of five major manufacturers: one American (Harley Davidson), and four Japanese (Honda,
Yamaha, Kawasaki, Suzuki) and some European companies (mainly BMW of Germany and some other Italian companies). Most companies market their motorcycles and accessories on a worldwide basis, handling international trade through foreign distributors and domestic sales through franchised outlets. Industry sales of motorcycles were shrinking in the early l990s because of the recession and the competition from computers and electronic products decreasing consumers' discretionary income.
Sales of accessories and parts make up 36% of total retail sales and is a viable area for producers to explore because people want something to differentiate their bikes. Previously, motorcycles were viewed as a cheap means of transportation. By 1992, they came to be viewed as a recreational, or a luxury item. This new perception of motorcycles led to the introduction of more expensive models with higher prices. This led to the introduction of consumer financing, one of the fastest growing service areas in the motorcycle industry.
MISSION
Harley's strategic objective is to continue to provide safe, high technology heavyweight bikes and keep customer satisfaction at high levels. This quality vision more than doubled Harley's market share and increased its brand loyalty. EXTERNAL PLANNING PREMISES
CUSTOMERS
They can be divided into 2 categories men and women.
Men. A. Men under 30. This group accounts for 44% of all sales. Therefore, a great opportunity exists here because of the group's size. This group's members buy motorcycles for their transportation and recreation needs. Men in this group buy more of mopeds, scooters and entry level lightweight road bikes.
B. Men between 30 and 50. This age group makes up 45k of buyers another large area providing opportunities for firms. The motorcycles most frequently purchased are the heavyweight tourers and cruisers. Many buyers are married couples looking for an alternative to taking the car out for weekend drives to the country.
C. Men over 50. This group accounts for about 11% of motorcycle sales.
The heavyweight touring class and the middleweight road bike categories account for most of the sales here.
Women. This group is a segment that is growing at a fast rate, thereby representing an opportunity area. Firms to be successful here are to provide smaller, easier to handle, comfortable, and good quality bikes to build up brand
Harley-Davidson states their mission as “We fulfill dreams through the experiences of motorcycling by providing to motorcyclists and to the general public an expanding line of motorcycles, branded products and services in selected market segments.” They have performed wonderfully over the past hundred years, and have not forgotten their mission or where they came from. Over the years they have stuck with the things they know, and also expanded into related services and products. Out of the 151 motorcycle manufacturers, Harley-Davidson and Indian were the only two companies to survive the Great Depression. Harley-Davidson was the only one in America after Indian dropped out in 1953, but face Indian again now since they re-entered the market in 1999.
Despite the differences in the two market segments, demographically there is an important similarity between the two market segments, both market segments focus on young adult females. Demographically,
Today's automotive industry in very competitive. Ford has had to find ways to keep ahead of the following major companies: BANC ONE, Bank America, BMW, Budget Group, Chrysler, Daimler-Benz, Enterprise Rent-a-Car, General Motors, Honda, Hyundai, Isuzu, Mack Trucks, Mitsubishi, Nissan, Peugeot, Saab, Suzuki, Toyota, Volkswagen and many others. Ford has developed a number...
External Opportunities • More people (94%) have new requirements for bicycles; the customers need bikes in different fields. • The popularity of Lance Armstrong has increased the interest on road bike, which represent 5% of the market. • The growing interest in cycling this is result in magazine coverage and the using of bikes and accessories in window displays that related to cycling.
These same sorts of systems could easily be added to, or modified as needed, to track the new motorcycle lines HD will produce to attract both women and young adults. These systems have been an invaluable means for HD to reevaluate itself in the past and thus are ‘tried and true’ making it a moot point to replace them. HD, however, needs to concentrate some effort on implementing a system to determine the most appropriate locations for future dealerships. This new evaluation system will aid HD in determining effective locations for new dealerships and assist in providing further market share penetration for the company in essentially ‘untapped’ consumer areas.
Like the automotive industry of the time, Harley-Davidson thought its cure customers would buy its products versus those of any of its major competitors, chiefly because they were all foreign. Interesting enough this was true, HD annual unit sales never changed; they just did not grow with either the market or even the population. In the 1950s motorcycle sales were approximately 50,000 units annually, of which HD had 70%. By 1971, there were nearly 4 million motorcycles registered in the US and HD market share had dropped to 5%.
Young males, and females are buying HD motorcycles over any other competitor. This thought was accomplished through the introduction of the VRSC’S, and the lower and narrow Sportsters, Dyna’s, Softail’s and positioning them in the market to a younger demographic. Secondly, HD needs to position the VRSC’S, Sporster, Dyna and Softail to also appeal to first time buyers of motorcycles.
The motorcycle industry offers products which can be viewed as luxuries or wants as opposed to necessities. When concerning Harley-Davidson, most motorcycle owners have purchased their bikes as a second vehicle, using them more during weekends and off-time instead of during the work week. This implies that the motorcycles serve for recreational purposes and thus are an item which can be expendable at times. This has hurt the industry recently with the slight recession the United States economy is facing. Another interesting thing to note about the motorcycle industry is the different appeal bikes carry in different global regions. In the United States for instance, Harley-Davidson has had much success because of the market trends and tastes people enjoy. Harley-Davidson has benefited from a U.S. market which enjoys casual and recreational riding. This isn’t necessarily the case overseas, as in Europe the trendy pick is a sleeker street bike, with a focus on speed and handling as opposed to power and comfort.
Michael Porter tells us how the life cycle works through stages, first of which is the development phase, into the introduction, growth, maturity, and decline. Hunsk motors didn’t carefully take into account each phase of its product sold, and lacked the ability to connect consumers towards the motorcycles identity. By introducing...
Males and females 15-24 years old, who are currently working and make time for going out with friends and family. They are infrequent users because they are health conscious and may be into another brand.
"We fulfill dreams through the experience of motorcycling, by providing to motorcyclists and to the general public an expanding line of motorcycles and branded products and services in selected market segments."
These 40 men were between 35 to 45 years in age and they worked as either
Italian manufacturer Piaggio ranks as one of the world’s top four players in its core business. It has consolidated leadership in the European 2-wheeler market. Piaggio should not miscalculate its competitors. Competition in the industry is very powerful, not only nationally but internationally as well. This is due to two well-established companies in this sector which are the Japanese Yamaha and Honda. Yamaha and Honda strengths are their long-run experience in the sector and the high quality image of products. Due to participations to the motorcycle championships, these two companies constantly receive positive feedbacks to their efforts in researching for first class products. In the future, other kinds of competitors are expected to arise: Chinese companies whose ability to imitate and create similar products at highly competitive prices is getting more and more dangerous (Piaggio, 2008)
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Demographically we can segment the market into groups based on age, gender, family- size, income, family life cycle and occupation.